Customer focused collaborative demand planning

Abstract

Many firms worldwide have adopted the process of Sales & Operations Planning (S&OP) process where internal departments within a firm collaborate with each other to generate a demand forecast. In a collaborative demand planning process buyers and sellers collaborate with each other to generate a mutually agreed upon forecast which takes into account the needs and limitations of both buyers and sellers. In this research we concentrate on finding out the value from both statistical and qualitative forecasts. We apply standard forecasting algorithms to generate a statistical forecast. We also generate a hybrid model that is a weighted technique using both a statistical and qualitative forecast. Then we evaluate the statistical, hybrid, and qualitative collaborative forecasts using an error analysis methodology. Finally we recommend an approach for forecasting a family of items based on our analysis and results. We also recommend changes to the existing process so that our recommendations on the forecasting approach can get seamlessly integrated into the overall process.